> a hybrid private/public pension model like the US

I'm not sure pensions exist in the US beyond a few public sector ones. The US model is entirely private at this point for all intents and purposes.

Also keep in mind that only about 55% of the US population owns any stock (including retirement accounts) [0], so (IMO, not an economist) the US is most likely looking at a retirement crisis in the coming decades.

[0] https://news.gallup.com/poll/266807/percentage-americans-own...

The US has a public pension scheme called "social security," which guarantees at least a minimum level of income in retirement to all citizens (although, not enough to live on IMO).

This is intended to be supplemented with private investments via 401k & IRAs, which are actually relatively new programs (created in the late-1970s, but nobody even talked much about them until the 90s).

So while most millennials understand they need to be saving privately in these vehicles (r/personalfinance has 15 million members), there's a huge forgotten generation in the middle who slipped through the cracks between the transition from industrial-era corporate pensions to personal saving.

These are the folks who will unfortunately bear the brunt of the retirement crisis, having to get by only on Social security.

Social Security is not a pension plan in the normal sense. It is structured and taxed differently than a pension that a company would provide.

> livable pensions

This is a myth. People struggle on state pensions throughout Europe, but for some reason young Americans idealize everything that comes out of Europe.

In Germany(a country of 80 mil), the average pension is $1000 once you get to 65. In France it's not much more. The social security in the US beats that, plus you can usually afford a private pension, because the government doesn't take 50% of your paychecks.

I personally know someone in Austria that worked all his life for the railroad, then he got sicker and sicker, but the state wouldn't give him a disability pension. He could barely work sitting all day. Then he got disability at around age 60, but he needed money so much that he had to collect scrap metal to make ends meet. Very sick, after 60 years old, collecting metal. This is just an anecdote...I know, but still.

Are you talking about the minimum pensions only?

In France, the average pension is 1393€ (~ $1574) [1]

Also the retirees purchasing power is higher than the working population [2]

Don't get me wrong, there are still too many retirees with too little money in France. But on average, the retirees are doing OK compared to the rest of the population.

[1] https://cleerly.fr/retraite/retraite-moyenne

[2] https://www.lefigaro.fr/retraite/les-retraites-ont-un-niveau...

I was commenting for the Americans. In the US you get a "meagre" state pension (social security) and people believe that Europeans have so much more...well that US state pension is on average $1500. But Americans have in general much better private funds, because they have lower taxes.

Before you ask, healthcare is free for retirees.

It's absolutely true and Americans like to do the evangelization of these strange beliefs about Europe. There are good and bad parts about every system and thinking everything is perfect in Europe is about as dumb as Euros are socialists and its bad dogma.

> There’s a surprisingly large amount of middle class Americans who will retire millionaires

This seems like a serious bug in the system, doesn't it? Why would old people retire as millionaries while young people struggle working long hours and can barely save anything?

Compounding interest...if you start early enough and take advantage of employer contribution matching, etc. But most people in the US won't retire as millionaires, let alone even retire. Unforeseen life events often cause people to dip into retirement savings and in some cases wipe out any gains. Also, once in retirement, life in the US can still be quite expensive. For example, Medicare and all the additional supplemental insurance(s) you need is absurdly expensive for retirees. Everything in the US is "out of pocket".

Because the lack of effective pensions require you to either work til you die or live off Social Security. Most people don't want to do either, so they direct a significant amount of their earnings to 401ks and the stock market.

The fact that young people struggle really doesn't have much to do with this.

Old people can’t work. They’d better be rich enough to sustain their lifestyles on investment income, otherwise they’d just die.

The bug is working people struggling not middle class people having livable retirements

In the UK you can stick whatever you want into stocks and shares isas, if you can afford it.

The problem is that housing costs rise to suck every spare penny of income from pretty much everyone so very few people have spare money to put into those isas.

I believe this is also a side-effect of these poor pension schemes.

European governments see the demographic timebomb coming, so they massively incentivize their citizens to invest in a primary residence, treating it as forced savings. This inflates local real estate values to ridiculous levels, especially while interest rates are low.

However, incentivizing your citizens to take leveraged bets (big mortgages) on a single piece of real estate is...not great.

This means the investment portfolio of the average European citizen is ONE specific apartment (zero diversification), and negative yielding sovereign bonds (via government pension funds).

Since most European mortgages are not fixed rate, it will be interesting to see what happens as interest rates start rising in Europe.

While the bonds will start paying better interest, that mortgage exposure might start to wreak havoc on the average citizens finances...

"Since most European mortgages are not fixed rate, it will be interesting to see what happens as interest rates start rising in Europe."

It's the second time I see this on HN. However, the reality seems more contrasted. From [1]:

"A striking feature of the credit market in the euro area is the very large heterogeneity across countries in the granting of fixed versus adjustable rate mortgages. Fixed rate mortgages (FRMs) are dominant in Belgium, France, Germany and the Netherlands, while adjustable rate mortgages (ARMs) are prevailing in Austria, Greece, Italy, Portugal and Spain."

For numbers there are some graphics around p.19

[1] https://www.ecb.europa.eu/pub/pdf/scpwps/ecb.wp2322~0ed0879d...

Is that so? Here in The Netherlands fixed rate is pretty common.

Fixed rate for lifetime?

Something I didn't realise until recently was in the US it's normal to have a 30 year mortgage with a fixed rate from the start, rather than a fixed rate for a few years and then either a variable rate or requiring a remortgage. My understanding is that most mortgages in the Netherlands tend to be 5-10 years fixed rather than lifetime.

In the UK I feel there's a lot of distrust of stock markets amongst normal people, partly because the FTSE doesn't grow (back in 2000 it was about 7,000, today it's about 7,500), and that's the one reported on the normal news. There's no widely reported "FTSE dividend reinvested" measure.

Add in the mortgage mess from annuity mortgages where people were sold the idea they could have their cake and eat it too, ended up without enough money to repay their mortgage at the end. Throw in the pension collapse of Equitable Life, the pension fraud from Maxwell, the stock "boom" in the 90s where normal people bought shares, driven by the selloff of nationalised industries, and then seeing those shares vanish in 2000 and never really recovering and you get a general distrust of private hands managing money, and a preference to trust the government.

This meant people put their money into houses starting in the late 90s, which combined with increasing household income as new families became dual-income led to increasing house prices and a snowball effect. Even 2008 didn't really impact, as it was mainly sold as a US problem which had an effect on the UK, but not a major one.

The UK government (any colour) will do anything to keep house prices growing as that's how you get votes.

At least in the Nordics, most folks I know in the past years have been taking out floating rate mortgages.

Makes complete sense given interest rates are zero right now. However, if the ECB keeps getting surprised by inflation (like the Fed is in the US), interest rates may have to be start rising in fast, dramatic fashion.

So it is in Italy. In UK fixed rates usually last 2-5 years, then revert to variable rates (and inevitably you have to remortgage).

Yes, for perspective relatively modest 3 bedroom houses in London are going up in price, every month, by more than the average person in the UK as a whole takes home.

You can be in the top 1% by income in London and still simply not be able to afford a small family home.

Home equity wealth inequality in crippling.

All the income from people in London is extracted by those owning the land, because you need to live somewhere to earn that money. It's basically monopoly, doesn't matter if you pass go and collect £200 or £2000, all that happens is the people owning the properties around the board take it until you run out (or if they want to extend the game

I am very worried (UK) that the government retirement safety net may not be there for us, as the retirement age is being pushed up beyond 70 but I am not sure most people can work full time that long without health issues.

Nor can we assume that the exceptional stock market returns of the past 15 years will be repeated, which means we need to save more for the same result.

I feel great pressure to earn a high wage in order to save a lot of it into a pension. This feel like a matter of survival.

Germany is even worse than you describe. The pension system managed by the government is not backed by any assets at all, but works by taking from the working population to the retired population. Given the age distribution in Germany this means young people are increasingly paying more to this system, while retired people receive less and less per person.

This was of course obvious already a while back, so the government decided to introduce additional ways to encourage saving for retirement (by giving tax discounts). However, they also managed to screw this up, because only contracts from certain insurance companies apply for these tax discounts. And these contracts have such a high management fee, that the real return of those constructs is negative.

<There’s a surprisingly large amount of middle class Americans who will retire millionaires just because they are able to save for their pension privately and take the proper amount of risk for their age (eg. Target date funds).>

Yet there's a surprisingly large amount of middle class Americans who have no retirement savings; either due to YOLO, or medical emergencies, or misunderstanding how to invest towards retirements.

> There’s a surprisingly large amount of middle class Americans who will retire millionaires

I would love to see some data around this. Because what I keep hearing (being in India) from the usual suspect sources is mostly gloom and doom[1]

[1] https://news.ycombinator.com/item?id=27205734

It might depend on your definition of "surprisingly." According to this source, about 10% of American households are millionaires and about 80% of those are first-generation millionaires (i.e. they didn't inherit the money).

Additionally, only about 1% of those millionaires are under 35. (This is a point that gets lost in the debate about inequality, in my view; most wealthy people are old for what I think are extremely obvious reasons.)

https://spendmenot.com/blog/what-percentage-of-americans-are...